“Disruptive innovation leads to the creative destruction of businesses that once seemed pre-eminent and secure.” Steven Blank
Disruptive innovation is creating new products or services that did not exist before. The innovation creates a new market that disrupts an existing market and displaces an earlier technology. This type of innovation is associated with startups. Large companies try to innovate like startups, but because of their structure cannot. Companies that do not innovate will have a limited life and go out of business. The world is changing at amazing speed. Companies that solve disruptive challenges and innovate become the new market leaders.
- Globalization: An example is: Asia is both a customer and a vendor.
- Distribution: Channels of distribution are changing from physical to virtual.
- Communication: The Internet gives instant information.
- Markets: Market creation is valued more than market share.
Examples of disruptive innovation:
- Automobiles replacing horse and buggies as a means of transportation.
- Television replacing radio as a means of receiving entertainment and news.
- Fax replacing telex to send business information.
- Personal computers and software replacing calculators, slide rules and typewriters.
- Internet changed how we communicate and access information.
- FedEx and UPS as an alternative to mail.
My Personal Disruptive innovation experience:
I was co-founder and CEO of SafeData, a data backup and recovery company. Our premium service offering was cloud-based high availability. High availability is data replication from one server to another. Infrastructure as a service (IAAS) has replaced high availability. IAAS is a cloud-based service where the client has no servers on site and uses servers in the cloud for all processing. IAAS is giving clients access to the latest technology at a fraction of the cost of high availability. Solution: Companies need to innovate like startups. Ideas:
- Change the corporate culture to be accepting of disruptive innovation.
- Make team members responsible for innovation as part of their job description.
- Buy startups with disruptive technology and help them grow the technology.
- CEO’s must support disruptive innovation by creating the right culture, environment and rewarding disruptive behavior.
- Start startups with the goal of replacing existing technologies.
Can you list additional examples of disruptive innovation?
What ideas can you add? Why are they important?
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Larry, very interesting, that has happened in my business several times, we are still changing with new products and services.
Neil…thanks for sharing your experiences…Larry
Innovation and constant niche creations, create an identity.
Your build on your success and add new options.
Garry…It’s just like the rag and shoe business. Thanks for your comments….Larry
Behavior (practices) is a keystone to create culture where innovation is possible because behavior it is not an outcome from knowledge which is the normal approach in our dominant culture to get outcomes but formation. But formation is not enough to get an adequate set of good governance behavior. To get those the Board must not follow only procedures but human “self-reflection” where each one certainties from each board member are released (what I believe, what I like, what I dislike, what I trust) to be able to observe, accept and reject so to have a new consensus coming from the intelligence created in this open minded conversation, where the dominant emotion are curiosity, candidness, acceptability of the other one as a different observer of the reality. This is a pre requisite to have Disruptive Innovation that allows business survival.
Sergio…I like your thoughts on board members “self reflection” and openness being a prerequisite to disruptive innovation. Thanks for your comments.
You hit the nail squarely on the head Larry. And it is about culture, the values and norms used to control what people do.
Actually, establishing the right culture is quite easy because everyone believes in the same good values and that there opposites are bad. Every person respects and wants to emulate the highest standards of good values, disrespects low standards, and hates things that reflect the bad values. One of our good values is to do better every day. Another is to have freedom/autonomy in what we do and another is that no one likes being told what to do.
So employees already have the right culture and all management has to do is help them achieve the highest standards. That cannot be done by attempting to direct and control them because that reflects disrespect for them and will cause the opposite effect to the one desired.
Great thoughts Larry. Best regards, Ben
So all manage
Ben…Great point…We cannot direct and control employees and expect them to innovate…Thank you for sharing this point.
I believe that large company culture, politics and ego will almost always prevent revolutionary innovation (as opposed to evolutionary innovation). If a large company wants to behave like a small business, it must separate the division, give them freedom to change their product as they see fit, and above all have the guts to can it fast if it’s not working. Set strict budgets within which the division must work, just like a startup. If they cannot succeed with free money and existing channels to market, which is more than most start off with, then they probably shouldn’t be there.
Mike…Thanks for your thoughts on separation, strict budgets and an existing distribution channel. A great beginning for a startup’s success.
I certainly enjoyed your article. I know of many companies now embracing “change management” processes as a part of the strategic planning — knowing that they must change the “culture” because of the “adaptability gap”. A culture shift to close a significant adaptability gap is a complex and volatile undertaking. This is easily understandable. The purpose of an organization’s culture is to preserve and protect its institutional wisdom, traditions, and brand. It is designed to resist change. An existing culture is only concerned about today in terms of yesterday, not what it needs to be tomorrow. Disruptive innovation among companies today is the leading edge of adaptive change.
Thank you for sharing your thoughts about the “adaptability gap” and the difficulties companies have in changing their culture. You explain it so well in this sentence: “An existing culture is only concerned about today in terms of yesterday, not what it needs to be tomorrow.” A company needs progressive management and an innovative consultant like you to start the process.